Home prices soared in recent years, but that rapid growth has started to subside in the past few months. According to National Mortgage Professional, home prices are now 55% higher than pre-pandemic levels, but month-over-month, prices have grown by just 0.1% as of December 2024. The month prior, prices grew by just 0.03%. This trend is expected to continue throughout 2025 as inventory rises, particularly in the Southeastern, South-Central, and Western U.S.
However, much of the anticipated easing has already begun in states like Florida and Texas. In simple terms, basic supply-and-demand dynamics are at play in markets where inventory has increased more rapidly since last summer, when home prices nationally began to move sideways in response to rising affordability concerns, said Mark Fleming, chief economist at First American.
“Higher mortgage rates in the latter half of the year, combined with higher inventory levels, triggered the cooling trend,” he explained. “If similar conditions persist through 2025, we should expect very moderate price appreciation.” The year didn’t begin with a cooling trend, however, with Fleming pointing out that home prices began 2024 at a 7% annualized pace of growth. Read more
